RENTAL CAR COLLISION COVERAGE FOR YOUR VACATION
By Victor J. Lefeve

Vacation time is nearing, and if your vacation plans include a car rental you may be pondering the question of whether or not to purchase the collision damage waiver offered by your car rental company.

When you buy collision and comprehensive coverage under your personal auto insurance policy, any temporary replacement of this auto will be covered by your policy. Then why should you even consider the purchase of the collision damage waiver offered by the auto rental company?

To begin with, the rental agreement you sign with the auto rental company may obligate you for a great deal more than the collision coverage provided under your personal auto insurance policy. Collision coverage under a personal auto insurance policy normally covers the lesser of the “actual cash value” of the auto (eg: replacement cost less depreciation), or the amount necessary to repair or replace the damaged auto. However an auto rental agreement may require the payment of other loss related expenses such as full value of the rental car, and loss of market value after repairs are made. The rental agreement may also include reimbursement of expenses for towing, storage, and loss of rental income while the rental auto is being repaired.

While you must consider the contractual obligations of your auto rental agreement, your must also be aware of the conditions, limitations, and exclusions under the personal auto insurance policy. In particular, all personal auto insurance policies limit insurance coverage to the United States, its territories and possessions, Puerto Rico and Canada.

Although collision waiver insurance fees may be considered high in some instances, you must also consider the amount of the deductible you are obligated to pay under your auto collision coverage, and the possibility of future premium increases when making a claim under your personal insurance policy.

Your peace of mind may be the convincing factor in your decision of whether or not you should purchase collision waiver damage from your rental car company.

Victor J. Lefeve, CPCU, CIC, CPIA is president of Employees Insurance Representatives, a local independent insurance agency.